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BSNL: A STRATEGIC ANALYSIS

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  • 1. 0
  • 2. Index• INDUSTRY PROFILE• COMPANY PROFILE• SWOT ANALYSIS• CRITICAL SUCCESS FACTORS• STRATEGY FORMULATION• SUMMARY 1 1
  • 3. INDUSTRY PROFILE• India has the fastest growing telecom network in the world with its high population and development potential.• The telecommunications system in India is the 2nd largest in the world.• Indias public sector telecom company BSNL is the 7th largest telecom company in world.• The total number of telephone subscribers in the country stands at 914.59 million, while the overall tele-density has increased to 76.03% as of Oct 31st, 2011• Total numbers of mobile phone subscribers have reached 881.40 million as of Oct 2011 2
  • 4. Statistics• The mobile tele-density has increased to 73.27 % in Oct 2011.• India was purported to overtake China to become the worlds largest mobile telecommunications market by the year 2013. It was also predicted that by 2013, the teledensity will shoot up to 75% and the total mobile subscriber base would be a colossal 1.159 billion• Total Wireless subscriber base increased from 791.38 Million in February 2011 to 811.59 Million at the end of March 2011, registering a growth of 2.55%.• Private operators hold 88.01% of the wireless market share where as BSNL and MTNL, two PSU operators hold only 11.99% market share. 3
  • 5. Statistics (continued)• Wireline subscriber base declined from 34.87 Million in February 2011 to 34.73 Million at the end of March 2011.• The share of Urban Subscriber has increased from 74.87% to 74.97% where as share of Rural Subscribers has declined to 25.03% from 25.13%.• The overall wireline Tele-density in India declines to 2.91 with urban and rural teledensity being 7.26 and 1.04 respectively.• Number of Internet users in India is the 3rd largest in the world next only to China and the United States of America. 4
  • 6. • Telephone Subscribers (Wireless and Landline): 914.59 million (Oct 2011)• Land Lines: 33.19 million (Oct 2011)• Cell phones: 881.40 million (Oct. 2011)• Monthly Cell phone Addition: 7.79 million (Oct 2011)• Teledensity: 76.03 % (Oct 2011)• Annual Cell phone Addition: 227.27 million (Mar 2010 - 2011)• Projected Teledensity: 1.159 billion, 75% of population by 2013. 5
  • 7. 6
  • 8. India Telecom - Growth Drivers• Foreign Direct Investment Today, telecom is the third major sector attracting FDI inflows after services and computer software sector. At present 74% to 100% FDI is permitted for various telecom services. This has helped the telecom sector to grow. Actual Inflow of FDI in Telecom Sector from April 2000 to September 2011 is US $12456 in million.• Declining Mobile Tariffs• Government Initiatives• Growing Handset Manufacturing Base• Value-added Services• Increased access to services 7
  • 9. • The mobile service penetration in the country is currently at 51 per cent and is expected to grow to 72 per cent by 2016.• Indias current MVAS industry has an estimated size of US$ 2.7 billion. The industry derives its revenues majorly from the top five to six products such as game based applications, music downloads, etc, which continue to form close to 80 per cent of VAS revenues, according to a study on the Indian MVAS industry by Deloitte.• The Indian MVAS industry is estimated to grow to US$ 10.8 billion by 2015, with the next wave of growth in subscriptions expected to come from semi-urban and rural areas, according to Sandip Biswas, Director, Deloitte in India.• Mobile Number Portability requests increased from 29.24 million subscribers at the end of December 2011 to 32.79 million at the end of January 2012. In the month of January alone, 3.55 million requests have been made for MNP. 8
  • 10. • The mobile handset markets revenues in India will grow from US$ 5.7 billion in 2010 to US$ 7.8 billion in 2016 -"The Mobile Handset and Smartphone Market in India" by business research and consulting firm Frost & Sullivan.• India is the second largest mobile handset market in the world and is set to become an even larger market with unit shipment of 208.4 million in 2016 at a CAGR of 11.8 per cent from 2010 to 2016, according to the study. 9
  • 11. COMPANY PROFILE•BSNL is a state owned telecommunication company in India formed on 1st October„2000, is one of the largest & leading public sector units providing comprehensive rangeof telecom services in India.•BSNL has about 43.74 million line basic telephone capacity, 8.83 million WLL capacity,72.60 million GSM capacity, 37,885 fixed exchanges, 68,162 GSM BTSs, 12,071 CDMATowers, 197 Satellite Stations, 6,86,644 RKm. of OFC, 50,430 RKm. of microwavenetwork connecting 623 districts, 7330 cities/towns & 5.8 lakhs villages .•It is the largest provider of fixed telephony and fourth largest mobile telephony providerin India, and is also a provider of broadband services.• It has footprints throughout India except for the metropolitan cities of Mumbai and NewDelhi, which are managed by Mahanagar Telephone Nigam (MTNL) 10
  • 12. •Before 2000, BSNL was known as the Department Of Telecommunications. During thisperiod, BSNL was the only telecom service provider in the country.•The corporation tasted competition for the first time after the liberalization of Indianeconomy in 1991.•Access Deficit Charges has been slashed by 20% by TRAI, on April 1, 2009. Thereduction in ADC may hit the bottom lines of BSNL. 11
  • 13. SERVICESUniversal Telecom ServicesFixed wireline services and landline in local loop (WLL) using CDMA Technologycalled bfone and Tarangrespectively. As of June 30, 2010, BSNL had 75% marketshareof fixed lines.Cellular Mobile Telephone ServicesBSNL is major provider of Cellular Mobile Telephone services using GSM platformunder the brand name Cellone & Excel (BSNL Mobile). As of June 30, 2010 BSNL has13.50% share of mobile telephony in the countryWLL-CDMA Telephone ServicesBSNLs WLL (Wireless in Local Loop)service is a service giving both fixed linetelephony & Mobile telephony. 12
  • 14. SERVICESInternetBSNL provides Internet access services through dial-up connection (as Sancharnetthrough 2009) as Prepaid, (NetOne) as Postpaid and ADSL broadband. BSNL held55.76% of the market share with reported subscriber base of 9.19 million Internetsubscribers with 7.79% of growth at the end of March 2010.Intelligent Network (IN)BSNL offers value-added services, such as Free Phone Service (FPH), India TelephoneCard (Prepaid card), Account Card Calling (ACC), Virtual Private Network (VPN), Tele-voting, Premium Rae Service (PRM), Universal Access Number (UAN).3GBSNL offers the 3G or the3rd Generation services which includes facilities like videocalling,mobile broadband, live TV, 3G Video portal, streaming services like online fulllength movies and video on demand etc.IPTVBSNL also offers the Internet Protocol Television facility which enables watchtelevision through internet. 13
  • 15. SERVICESFTTHFibre To The Home facility that offers a higher bandwidth for data transfer. This ideawas proposed on post-December 2009.HelpdeskBSNLs Helpdesk (Helpdesk) provide help desk support to their customers for theirservices.VVoIPBSNL, along with Sai Infosystem - an Information and Communication Technologies(ICTs) provider - has launched Voice and Video Over Internet Protocol (VVoIP). Thiswill allow to make audio as well as video calls to any landline, mobile, or IP phoneanywhere in the world, provided that the requisite video phone equipment is available atboth ends.WiMaxBSNL has introduced Indias first 4th Generation High-Speed Wireless BroadbandAccess Technology with the minimum speed of 256kbit/s. The focus of this service ismainly rural customer where the wired broadband facility is not available. 14
  • 16. COMPETITORSBSNL competes with other mobile operators throughout India.•Aircel•Airtel•Idea•MTNL•MTS•Reliance Communications•Tata DoCoMo•Tata Indicom•Uninor•Videocon•Virgin Mobile•Vodafone.•Loop Mobile 15
  • 17. %age Telephone Market Share of BSNL %age Telephone Market Share of BSNL Year Wired lines Wire Less Grand Total WLL GSM Total31.03.2001 86.46 0 0 0 77.7331.03.2002 87.21 43.14 0.27 3.11 74.3331.03.2003 86.92 45.34 17.78 20.05 69.9831.03.2004 86.60 10.13 20.09 17.44 54.4131.03.2005 86.72 10.17 23.01 19.41 47.6931.03.2006 85.22 8.66 24.8 19.96 39.2731.03.2007 82.75 7.97 22.59 18.66 31.2931.03.2008 80.05 6.69 18.82 15.64 24.1031.03.2009 77.42 5.28 16.2 13.32 18.9831.03.2010 75.34 3.78 15.01 11.88 15.6628.02.2011 72.78 2.44 1614.87 11.41 14.00 16
  • 18. Customer Market Share (CMS) June 2011• Bharti Airtel is the market leader both in terms of Revenue Market Share (RMS) and Customer Market Share (CMS). Bharti is followed by RCom and Vodafone. Service Provider wise Wireless Market Share (CMS) June 2011 Bharti 19.87% Reliance 16.82% Vodafone 16.62% Idea 11.17% BSNL 11.00% Tata 10.68% Aircel 6.81% Uninor 3.09% Sistema 1.38% Videocon 0.84% MTNL 0.65% S Tel 0.39% Loop 0.37% HFCL 0.16% Etisalat 0.15% 100.00% 17
  • 19. • Private operators hold 88.01% of the wireless market share where as BSNL and MTNL, two PSU operators hold only 11.99% market share. 18
  • 20. • BSNL and MTNL, two PSU operators hold 82.61% of the Wireline market share. 19
  • 21. VISION•To become the largest telecom Service Provider in Asia. 20
  • 22. MISSION•Be the leading telecom service provider in India with global presence.•To provide world class State-of-art technology telecom services ondemand at affordable price•To Provide world class telecom infrastructure to develop countryseconomy•Leveraging technology to provide affordable and innovative products/services across customer segments•Providing a conducive work environment with strong focus onperformance•Building effective IT systems and tools 21
  • 23. OBJECTIVES• To be the Leading Telecom Services provider by achieving higher rate of growth so asto become a profitable enterprise.• To provide quality and reliable fixed telecom service to our customer and therebyincrease customers confidence.• To provide customer friendly mobile telephone service of high quality and play aleading role as GSM operator in its area of operation.Strategy for:• Rightsizing the manpower• Providing greater customer satisfaction• Contribute towards:• Broadband customers base of 20 Mn in India by the end of 2011-12 as per broadbandpolicy 2004.• Providing telephone connections in villages as per Government policy.• To leverage the existing infrastructure of BSNL for facilitating implementation of othergovernment programmes and initiatives particularly in the rural areas. 22
  • 24. Financial Performance Financial Performance In Rs CroresParameters 2006-07 2007-08 2008-09 2009-10 2010-11Income 39,715 38,053 35,812 32,045 29687Expenditure 31,466 33,636 34,354 34,078 36001Net Profit 7,806 3,009 575 (-)1,823 (-)6384 23 23
  • 25. SWOT ANALYSIS 24
  • 26. STRENGTHS Service in Rural Areas Experienced telecom service provider Total telecom service provider Huge Resources Huge Optical Fibre network and associated bandwidth 25
  • 27. WEAKNESSPoor marketing strategyBureaucratic organizational set upInflexibility in mindset (DOT period legacies)Limited number of value added servicesLegacy of poor service imageHuge and aged manpowerProcedural delaysLack of strategic alliancesProblems like outdated technologies, unproductive rural assets, social obligations,political interference,Poor IT penetration within organization 26
  • 28. OPPORTUNITIES• Tremendous market growing at 20 lakh customers per month• Under tapped broadband services• Untouched international market• Can capitalize on public sector image to grab government‟s ICT initiatives• Leveraging the brand image to source funds• Fuller utilization of slack resources• Can make a kill through deep penetration and low cost advantage• Broaden market expected from convergence of broadcasting, telecom and entertainment industry 27
  • 29. THREATS• Competition from private operators• Keeping pace with fast technological changes• Market maturity in basic telephone segment• Multinational eyeing Indian telecom market• Decreasing per line revenues due to competitive pricing• High bargaining power of customers• Private operators demand to do away with ADC can seriously effect revenues• Policies of government like “OneIndia” rates 28
  • 30. Critical Success Factors• the limited number of areas in which satisfactory results will ensure successful competitive performance for the individual, department, or organization• activities required for ensuring the success your business. Critical success factors may change over time, and may include items such as product quality, employee attitudes, manufacturing flexibility, and brand awareness 29
  • 31. CRITICAL SUCESS FACTORS• Industry CSF’s resulting from specific industry characteristics;• Strategy CSF’s resulting from the chosen competitive strategy of the business;• Environmental CSF’s resulting from economic or technological changes; and• Temporal CSF’s resulting from internal organizational needs and changes. 30
  • 32. • Rockart and Bullen presented five key sources of CSF’s:• The industry,• Competitive strategy and industry position,• Environmental factors,• Temporal factors, and• Managerial position 31
  • 33. The IndustryCritical success CSF’s common to all companies operating within the same industry.factor Industry’s set of characteristics define its own CSF’s Different each organization has its own unique goals so while there may be some industry standard – not all firms in one industry will have identical CSF’s. Some trade associations offer benchmarking across possible common CSF’s.Competitive strategy and The nature of position in the marketplace or the adopted strategy toindustry positionCritical success gain market share gives rise to CSF’sfactor Differing strategies and positions have different CSF’s A firm’s current position in the industry (where it is relative to other competitors in the industry and also the market leader), its strategy, and its resources and capabilities will define its CSF’s The values of an organization, its target market etc will all impact the CSF’s that are appropriate for it at a given point in time.Environmental FactorsCritical Economic, regulatory, political, and demographic changes create CSF’ssuccess factor for an organization. These relate to environmental factors that are not in the control of the organization but which an organization must consider in developing CSF’s Examples for these are the industry regulation, political development and economic performance of a country, and population trends. 32
  • 34. Temporal FactorsCritical short-term situations, often crises.success factorCritical one-off CSF’s resulting from a specific event necessitating theirinclusion.success factorCritical success factorManagerial PositionCritical An individual role may generate CSF’s as performance in a specificsuccess factorCritical manager’s area of responsibility may be deemed critical to the success of ansuccess factor organisation. In organizations with departments focused on customer relationships, a CSF for managers in these departments may be customer relationship management. 33
  • 35. CSF OF BSNL•NETWORK COVERAGE AND HUGE INFRASTRUCTURE•LOYAL CUSTOMER BASE•GOVERNMENT POLICIES ON ICT INITIATIVES ANDSUBSIDIES. 34
  • 36. STRATEGY FORMULATION• Clear technology strategy• Customer Orientation Strategy• Extensive use of IT• Shorten the purchase-decision cycle• marketing strategy needs to be redefined and should focus around Value Added Services• Overhaul its Human Resource Management strategy• Restructuring of organization• Immediate implementation of CDR based billing.• Revenue generation through Value Added Services(VAS) 35
  • 37. 1.CLEAR TECHNOLOGY STRATEGY•BSNL should go in for innovative products based on convergent technology in order toacquire dominant market position.•This can be achieved by – • Replacement of all the outdated technologies immediately, • Redeployment of unutilized capacities should be considered first. • Early deployment of cost effective wifi/wi max technologies • Increasing the capital investment in convergent technologies even if it renders certain in use technologies redundant.•In spite of cost implications the alternatives of scaling/upgrading of existingtechnology should not be considered since it will not yield the desired results. Insteadthe focus should be on achieving dominant market position through large-scaledeployment of new technology 36
  • 38. 2.CUSTOMER ORIENTATION STRATEGYIt will retain existing customers as well as to attract new customers by • Creating a Service-Oriented culture within the organization. • Introducing flexible Registration Terms so that new customers are attracted. • Educating the customer about services in detail and respective tariff structure • Introducing service at door-step. • A successful loyalty programme becomes the driving force in customer relationship management strategy 37
  • 39. 3.EXTENSIVE USE OF IT•It will improve operations but can add to greater customer satisfaction. Despite being atechnology intensive organization IT penetration in BSNL is not high.• Presently, the use of IT in BSNL is restricted to – • DQ (Directory Enquiry), IVRS (Interactive Voice Response System) • Accounting and billing systems • Commercial & Fault Repair System package • Telephone Directory on CD ROM and on the Internet.•BSNL should create intra-BSNL IT network connecting all the SDCAs (short distancecharging area)through VPN network for the organization‟s own use to improve efficiencyand transparency.•Instead of integrating the existing segment specific software, it is recommended thatstandard integrated packages should be considered. 38
  • 40. 4.SHORTEN THE PURCHASE-DECISION CYCLE•BSNL should redefine procurement processes to shorten the purchase-decisioncycle, which is critical in project implementation to any telecom service provider.•BSNL should enter in long term supply contract with world-class players to comeout of mantra of tendering process.• This will help BSNL to counter the strategy of its competitors to stall the veryprocurements of critical items. 39
  • 41. 5. BSNL’S MARKETING STRATEGY NEEDS TO BE REDEFINED• It should focus around Value Added Services, building strong distribution chain and differential treatment to premium/corporate customers• Marketing is going to be the key to success – BSNL should come out with a variety of schemes for the end subscriber, both commercial and residential. 40
  • 42. 6.HUMAN RESOURCE MANAGEMENT • It has a vast manpower of 2,82,690 as per march 2011. • To meet the technological challenges, employees need to be trained for technology up-gradation, modernization, computerization etc in a targeted manner. • Though different training programs are being run in various training centers of BSNL to impart technology based training, they seem to be outdated in the fast changing competitive environment and with formation of corporate. • The dynamics of transition from a lethargic government organization to a professionally running company requires tremendous up gradation in Human Resources. 41
  • 43. • There are various aspects of managing an organization that many employeeseven at top levels in BSNL are unaware of.• At one hand the competition has brought in the requirement to learnprofessional skills in fields like Marketing, HRD, Finance etc. , 42
  • 44. BSNL need to mend its Human Resource Management strategy and should focus on – • Tie up with top business schools in India for training their managers at various levels. • Redeploying its manpower from bigger cities to smaller ones • Coming out with VRS/CRS for manpower above the age of 50. • Creating value through employee motivation and should develop reward and punishment systemThe VRS/CRS scheme is likely to be opposed by the unions and the implementationmay be difficult in the politicized environment. However, rightsizing theorganization is of paramount importance for the long run interest. 43
  • 45. 7.RESTRUCTURING OF ORGANIZATION • BSNL‟s organization structure still remains more or less functional in structure. • Restructuring of organisation can with each product/segment considered as a separate business will help in • Better management • Improved segmental efficiencies • Improved organizational communication • Better performance monitoring • Develop focus on revenue 44
  • 46. 8.REVENUE GENERATION THROUGH VALUE ADDED SERVICES(VAS)•The major chunk of these revenues have come from basic services and only recently therevenues from cellular business (to the tune of Rs 3000 cr. per annum) . Moreover ADC(Access Deficit Charge) and inter-connect charges income have decreased due to influenceof TRAI.• With continuous decrease in long distance call rates and growth of private network therevenues from ADC and inter-connect charges will eventually disappear.•BSNL should realize that the basic services market and revenues from it are also shrinkingand it is necessary for a telecom service provider like BSNL to concentrate on increasingrevenues through VAS. 45
  • 47. • While many of the operators in India and outside are generating more than 25% of their revenues through VAS, BSNL cannot attribute even 5% of its revenues to VAS. I• In order to succeed the strategy of BSNL should be built around strengthening its VAS like SMS, MMS, broadband content generation etc. and marketing them. BSNL can also go for large-scale tie-ups with content providers. 46
  • 48. SUMMARY•BSNL should change its very strategy of acting as follower to that of leader.•Instead of reacting to other operators move it should start acting proactively.• The overall strategy of BSNL can be of concentrating on the mobile and broadbandbusiness in near future and to immediately phase out loss making businesses liketelegraph.•.BSNL can leverage on its pan India reach and economies of scale to achieve overall costleadership.•At the same time capital investments can be made in next generation networks wherestress should be on Wi-Max, content based data service and VOIP.•Emphasis on organizational restructuring coupled with customer orientation andoperational efficiency can help BSNL find place in Asian Telecom market. 47
  • 49. 48 48